Turnaround Is Near, Dobbs Tells Attendees

SAN FRANCISCO -- Lou Dobbs delivered a message of optimism and challenges at the opening general session yesterday of the Direct Marketing Association's 85th Annual Conference & Exhibition here.

"This economy is underestimated more times by more people around the world, despite [its] better-than-200-year record," Dobbs said. "I believe even though we've endured seven quarters of declining business investment [and] six quarters of declining corporate earnings, we are on the verge of reversing both trends."

The anchor and producer of CNN's "Moneyline" also told direct marketers that the stock market will be up 15 percent a year from now. Other predictions included a 2.5 percent growth in gross domestic product this year with 3.5 percent or better growth next year.

"Inflation will remain constrained, and unemployment will decline certainly in the first quarter going forward," he said.

In what would be a reversal of the trend, Dobbs predicted that the next move in interest rates would be an increase.

"But I don't think we're going to see an interest rate move in either direction, at the earliest for six months, or more likely nine to 12," he said.

While saying that the consumer has stayed strong during the recession, he was candid when discussing many elements related to the downturn in the economy.

"Did anybody here invest in technology?" he asked, a question that drew audience laughter. "The Nasdaq, since the peak in March of 2000, has fallen 75 percent. The Dow Jones industrials have fallen 30 percent.

"This is a market crash by any definition. The fact is, it didn't happen in one day. It was ... torture by a thousand cuts. The third quarter ... was the worst stock market performance since '87. When people ask me if I'm prepared to say that the bear market is over and good times are ahead ... I am very, very cautious."

The war on terrorism and the terrorist attacks also were mentioned.

"The war against terrorism will cost us hundreds of billions of dollars in the years ahead," Dobbs said. "As the president has said, this is not a short-duration engagement. It's going to be expensive. Budget surpluses have now moved to budget deficits.

"I would go one step farther. This is not a war against terror. It is a war against radical Islamists, pure and simple."

He said that the best estimates for the cost of a war against Iraq are $6 billion to $9 billion per month, to be borne by the United States alone, unlike the Persian Gulf War.

"But not much attention is given to what the cost of failure in the war against terrorism might be," he said. "The Brookings Institution did a study of what would happen if one major city in this country were hit by a biological attack, in addition to the loss of life. In economic terms, $750 billion. This is a war [in which] we cannot afford one failure."

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